Correlation Between Sumitomo Mitsui and Kraft Heinz
Can any of the company-specific risk be diversified away by investing in both Sumitomo Mitsui and Kraft Heinz at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sumitomo Mitsui and Kraft Heinz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumitomo Mitsui Financial and The Kraft Heinz, you can compare the effects of market volatilities on Sumitomo Mitsui and Kraft Heinz and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sumitomo Mitsui with a short position of Kraft Heinz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumitomo Mitsui and Kraft Heinz.
Diversification Opportunities for Sumitomo Mitsui and Kraft Heinz
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sumitomo and Kraft is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sumitomo Mitsui Financial and The Kraft Heinz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz and Sumitomo Mitsui is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sumitomo Mitsui Financial are associated (or correlated) with Kraft Heinz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Heinz has no effect on the direction of Sumitomo Mitsui i.e., Sumitomo Mitsui and Kraft Heinz go up and down completely randomly.
Pair Corralation between Sumitomo Mitsui and Kraft Heinz
Assuming the 90 days trading horizon Sumitomo Mitsui Financial is expected to generate 0.74 times more return on investment than Kraft Heinz. However, Sumitomo Mitsui Financial is 1.35 times less risky than Kraft Heinz. It trades about 0.0 of its potential returns per unit of risk. The Kraft Heinz is currently generating about -0.24 per unit of risk. If you would invest 8,856 in Sumitomo Mitsui Financial on October 25, 2024 and sell it today you would lose (18.00) from holding Sumitomo Mitsui Financial or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Sumitomo Mitsui Financial vs. The Kraft Heinz
Performance |
| Timeline |
| Sumitomo Mitsui Financial |
| Kraft Heinz |
Sumitomo Mitsui and Kraft Heinz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumitomo Mitsui and Kraft Heinz
The main advantage of trading using opposite Sumitomo Mitsui and Kraft Heinz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumitomo Mitsui position performs unexpectedly, Kraft Heinz can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kraft Heinz will offset losses from the drop in Kraft Heinz's long position.| Sumitomo Mitsui vs. Credit Acceptance | Sumitomo Mitsui vs. HDFC Bank Limited | Sumitomo Mitsui vs. Hormel Foods | Sumitomo Mitsui vs. The Hartford Financial |
| Kraft Heinz vs. Roper Technologies, | Kraft Heinz vs. GX AI TECH | Kraft Heinz vs. Verizon Communications | Kraft Heinz vs. Electronic Arts |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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